Desktop Metal is Printing Its Own Future

There Is A Revolution In 3-D Printing And Desktop Metals Is Part Of It 

Just when you thought 3-D printing had reached the end of its interest for stock market participants in walks Desktop Metals (NYSE:DM). Desktop Metals is the self-proclaimed first and only pureplay on the Additive Manufacturing 2.0 market and recently came to market via SPAC. Additive Manufacturing 2.0, a phrase coined by Desktop Metals, refers to a revolution in 3-D printing that is underway right now. The key takeaways for both businesses and investors center around materials, applications, and most importantly speed. The new line of 3-D printers that Desktop Metals has on the market uses metals and carbon fiber (among other things) to build highly specific widgets at a speed that makes their use commercially viable. The units come in three sizes. The Studio System is an office-friendly version that can be used for prototypes and development, the larger Shop System and Production System are designed for large-scale consumer-ready production. 

Desktop Metals Had A Mixed Q4 

Desktop Metals had a mixed Q4 but the devil is in the details. The $16.47 million in revenue missed the consensus and is down nearly 40% YOY but there are several factors to consider the pandemic not least among them. Also of note, the company is still in the very earliest phases of production and growth. On the bottom line, the $0.57 per share loss was also worse than expected but due largely to deleveraging related to the revenue decline and acquisitions growth during the quarter. The upshot for investors is that the company remains liquid with ample cash and short-term deposits to cover operating until manufacturing picks up again. Based on the data manufacturing is picking up so we expect to see this company’s volume grow significantly over the next year. 

Desktop Metals has not been sitting around waiting for the business to come back. Instead, the company has been using its liquidity, cash-flow, and balance sheet to fuel organic and inorganic growth opportunities when they arise. To that end, the company completed the acquisition of EnvisionTEC, a leader in the photopolymer 3-D printing segment, both broadening the company’s product line and strengthening global distribution channels. 

In addition to the EnvisionTEC acquisition, Desktop Metals also launched a new business segment. The new segment is called Desktop Health and focused on 3-D printing solutions for the healthcare industry. The segment will be headed by Michael Jafar, a health industry exec with 20 years of experience, and aim to enhance healthcare applications in all areas. 

Desktop Metals Breakthrough Technology 

Desktop Metals recently announced the creation of breakthrough technology that could revolutionize aluminum manufacturing. The company along with its partner Uniformity Labs created an aluminum-based powder for use in its binder-jet technology that produces 6061 aluminum at a higher quality and lower cost than traditional methods. The technology is expected to have many applications in the aerospace, automotive, and consumer electronics industries all of which are booming or expected to boom over the coming year. 

The Technical Outlook: Desktop Metals Moves Up After Q4 Earnings 

Shares of Desktop Metals are moving higher after the Q4 earnings report but don’t rush into the market just yet. The move looks bullish and is supported by a positive outlook but there are some bearish technical factors to overcome first. The first is resistance at the short-term moving average, the second is a convergent extreme peak associated with the recent low. If price action can get above the moving average it might negate the implications of the extreme peak but that is not something we want to bet on. If the price action doesn’t get above the EMA we expect a retest of support that may go as deep (signaled by the extreme peak) as the recent low before bottoming.